Ratio decidendi is Latin for "rationale for the decision." The term refers to a key factual point or chain of reasoning in a case that drives the final judgment. When considering earlier cases as precedent, courts often ask parties to be very clear about how they interpret the main guiding principle or ratio decidendi of the earlier case. To determine the ratio decidendi of a case, courts look to the material facts of the earlier case and the law used to justify the decision on those facts.
Ratio decidendi is the basis for a court decision and creates binding precedent. Ratio decidendi differs from dictum which describes unnecessary observations that have no force as precedent. [Last updated in August of 2023 by the Wex Definitions Team]